Wearable technology is making a splash in the consumer marketplace. People are wearing watches, bracelets, and other devices—some even touted as fashionable as well as convenient—that do anything from tracking their fitness activities to opening their front doors. It’s only logical that making payments joins the list of wearable capabilities.
Major Players Explore the Potential
Mobile platform developers are eager to connect their wearables-clad customers to the cash register, with digital wallet solutions like Apple Pay, Android Pay, and Samsung Pay leading the pack to support smart watch payments.
And other wearable innovations are being created, tested, and launched by e-commerce and consumer tech companies, financial institutions, and watch manufacturers alike. Examples include Alibaba/Ant Financial (Alipay), Barclays (bPay), Disney (MagicBand), Swatch (Swatch Zero Touch), and even American Express/Jawbone, who have teamed up to deliver UP4, a two-in-one device for tracking fitness and making payments.
Here’s a sampling of wearables employing different types of technology to enable payment transactions:
- Rings with built-in near field communications (NFC) chips
- Clip-on devices with NFC-embedded chips
- Clothing that displays QR codes for scanning
- Smartwatches that pair with mobile phone equipped with payment apps
- Traditional watches containing a card supporting financial transactions
Market Research Supports Growth
The interest in wearable payment technology converges with consumer and merchant uptake of contactless cards and mobile payments. Yet all of these methods are still relatively new—they haven’t surpassed traditional payment forms like cash or swipe cards.
Consider these statistics taken from a PowerReviews report on wearables:
- 82% of consumers want technology to enhance their shopping experience
- 49% of consumers want technology to save them time when shopping
- 34% of consumers want wearables to make life easier
- 25% of shoppers want alerts about long lines in stores via wearables or mobile device
- 22% of shoppers say they’re interested in using touchless or one-click payments
- 21% of consumers say they welcome new technology innovations like wearables to enhance their in-store shopping experience
(For more stats, visit Who are the Wearable “Pay” Players? on Pymnts.com.)
Market intelligence firm Tractica estimates that wearable payment transaction volume will grow from $3.1 billion in 2015 to $501.1 billion worldwide by 2020. This will represent nearly 20% of the total mobile proximity transaction volume and close to 1% of total cashless retail transactions.
While it’s clearly too early for consumers leave their leather wallets at home, the market for wearable and other forms of contactless payments is growing.
Consumer adoption of the devices—and their willingness to change their in-store shopping behaviors—are likely to drive merchant support of new payment systems. Check back for more insights into the fast-changing wearable payments market.